Billion-dollar Bono: U2 star is now elevated to top investor

It would be hard to believe for most of his fans, but Bono may soon be making
more money as a suited Wall Street investor than as an international rock
star.

The singer, who was branded “the worst investor in America” by an influential
financial blog only last year, seems to be having the last laugh now after
an investment company he fronts is sitting on a share in Facebook which has
quadrupled in value in less than two years.

In November 2009 Elevation Partners — a US investment firm in which Bono is a
partner — paid $210m for a stake in the social networking giant. After
another investor sold its stake in the company yesterday, Elevation
Partners’ stake is now valued at close to $1bn — or $975m to be precise.

That 400pc increase is a big turnaround for Bono, who was deemed “the worst
investor in America” by the ’24/7 Wall Street’ last year.

He earned that title after a host of Elevation investments — dubbed “arguably
the worst-run institutional fund of any size in the United States” — turned
sour.

The $1.9bn fund was founded in 2004 by Bono and top fund manager Roger
MacNamee among others to invest in media, music and gaming deals. It pumped
around $480m into the smartphone maker Palm — once a leader in the
smartphone market — in 2007 only months before Apple’s iPhone almost wiped
the company out.

Ultimately, Bono’s firm broke even on its Palm investment when the computer
giant Hewlett-Packard bought the company at a bargain basement price. The
conditions of Elevation’s investment meant it would be reimbursed in full if
Palm was sold.

In 2006 Bono’s fund invested some $300m in the US publishing company Forbes.
The family-owned company, best known for the ‘Forbes’ business magazine, was
valued at around $750m at the time but the magazine sector has seen its
value plummet since then, and the company is now estimated as being worth
around $100m .

More recently, U2 are believed to have backed the Broadway musical “Spiderman:
Turn off the Dark” to the tune of $65m and counting, but there seems little
hope of them getting their money back. The show has been beset by problems,
including injured crew, a delayed opening, and negative reviews.

The Facebook investment though, may be a sign of a change in fortune for the
fund. Elevation was reported to have put $100m into Pandora, a heavily hyped
online music service which went public last month but it is not clear if it
ultimately invested in the company.

Still, the fund looks well placed to invest more in the trendy media and
technology space, which is riding a wave of growth at the moment. That has
prompted fears of another technology bubble, similar to what happened at the
turn of the century when a host of internet companies listed on the stock
market only to see their value plummet after a short time, creating massive
losses for investors.

In any case, even if the investment side of things doesn’t work out for Bono,
he will always have the music to go back to, and that should leave him with
a tidy little sum for retirement.

U2’s ‘360’ Tour, which ended after two years earlier this year, was the
highest grossing tour of all time. Surpassing The Rolling Stones ‘Bigger
Bang’ tour.

It is believed to have netted the band $195m, and the fact that much of the
band’s business is domiciled in Holland for tax purposes means profits from
record sales will only get bigger.